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Apr, 06 2012

Invest in Profitable Vocation

Who doesn't want to brush up skills in today's time? If your forte lies in boosting one's skill-set, investing in a professional skills development industry can turn out to be an apt business option for you.

THE demand of skill development industry in India has been growing by leaps and bounds. To meet the ever-growing demands of every sector of a developing economy like ours, the vocational education industry plays a pivotal role in building a skilled workforce thereby providing employment opportunities to young aspirants with a 100 per cent job assurance through placements, and also making them industry ready.

Ironically, India's service industry is suffering owing to a dearth of trained workforce, and talent crunch is already hampering the industry's growth. To get the right people for delivering the services efficiently, the corporate and government bodies are joining forces with the vocational training industry.

To fulfill the growing demand for providing trained manpower for various businesses or sectors, the division of vocational education sector into IT, Finance or Accounts, Business process Outsourcing (BPOs), Animation or CAD training, Fashion, Jewellery, Interior Designing, Retail, and Hospitality segments is regarded as blessing in disguise for students who look forward to pick one of them as their vocation. So, a huge scope for franchisors/private big-shots comes into the picture. The vocational education industry offers a great opportunity to tap the uncharted locations with the highest potential.

Now, the million-dollar question is what exactly is motivating the vocational education segment to flourish at a faster rate? Thanks to the growing middle class, rise in disposable incomes, dearth of manpower across various sectors, changing consumers' behaviour towards improving their skill-set, and picking a vocation that assures a job are all cumulatively giving a boost to India's vocational education industry. To obtain maximum returns in no time, the vocational education industry is regarded as a worthwhile business option to invest in. Considering the steep rise in demand for vocational subjects, the government and private institutes have launched vocational education in schools and colleges to provide a platform to students so that they can pick the trade/vocation of their interest. According to statistics provided by Research & Markets, the world's largest market research resource, the non-formal education market is expected to grow with a CAGR of 13.23 per cent (US$~ billion) by 2012.”

About non-formal education segment's share in the market, Santosh Kumar Choubey, CMD, AISECT Ltd, said: “The present structure of the industry is dominated overwhelmingly by the formal education segment, which accounts for close to 80 per cent of the Indian education industry. The balance 20 per cent is constituted by various segments of the non-formal education segment. Interestingly, the fastest growing segments in the overall Indian education sector belong to the non-formal education segment (viz. vocational education, multimedia content, preschools, etc).”

The vocational training industry has a major role to play in driving India's economic growth engine by offering the right talent to right people to accomplish corporate goals. Elaborating on the market worth of vocational education and its growing demand in India, Sharad Talwar, CEO, IndiaCan, says: “The vocational training market in India is worth approximately $ 1.6 billion and is estimated to be growing at the rate of 25 per cent per annum. According to the latest Human Resource Development Ministry statement, India will need 500 million skilled persons by 2022 to sustain its double-digit growth. That's why the need to strengthen vocational education at all stages is more important than ever.” He adds: “A major emphasis is now being laid on streamlining vocational education so that it fulfills the emerging need of the market. This is exactly where IndiaCan comes to contribute in various streams of vocational training.”

Growing tribe of edupreneurs

Non-formal education has been around for quite some time, but the trend has only recently gained momentum. Alongside, franchising is also giving impetus to cement the brand's footprint in the unmapped locations and also providing an opportunity to the aspiring entrepreneurs. From a business perspective, the industry itself has immense potential for various segments to bloom in a big way. Santosh of AISECT Ltd, firmly believes that franchising has a significant role in disseminating quality education. He says: “Seeing the growth of education franchising, many investors running independent businesses are vying to switch over to the franchise sector, since there is a scope for achieving recognition in the local market in a short span of time.”

As vocational training space is getting more organised, players are leaving no stone unturned to make the most of this lucrative opportunity. Naveen Gupta, Executive Director & CEO, Frameboxx Animation & Visual Effects, agrees: “Education has become a more organised sector with the advent of new age franchising models that not only share their expertise and knowledge but also impose strong operation policies to create uniformity in service delivery throughout , which eventually creates a win-win situation for customer and for service provider as well.”

Within the education and training industry, the professional skills development or vocational education market is on a new high as many private equity players as well as venture capitalists are eyeing to invest their energy to conquer the market's largest pie. Besides, franchising has also widened its base in this category, as a major part of the industry is highly unregulated due to the presence of fragmented market. The franchising in professional skills development industry is gradually casting its spell on aspiring franchisees too, as investments are relatively negligible allowing for a wider scope.

The domain of vocational education is thriving, as it is dominated by big-shots such as NIIT Ltd, Aptech Ltd, AISECT, IndiaCan, The Institute of Finance & Management, AHA ( Air Hostess Academy), NIFT, Orion Calltech, Kompass Aviation and CADD Centre, Frameboxx, VETA, ICA, and ZEE Institute of Creative Arts, to name a few. As players started entering the competitive market, some of them shifted their focus by adapting to the conventional ways of learning by introducing newer technologies to provide practical exposure to aspirants with more emphasis on brushing up their skills.

Franchise report card

The professional skills development industry offers a pocketful of opportunities, and is all set to scale new heights at a faster rate. For many players, franchising seemed to be an impeccable path for scaling up the business and spreading presence across the country. Currently, AISECT has presence in 5,000 cities with over 8, 500 centres. About strengthening its presence, Santosh of AISECT Ltd, said: “We estimated to add about 1000 new centres to our network across the focus states of Gujarat, Maharashtra, Punjab, UP, Bihar and Orissa. We continue to focus on districts and blocks of all these states.”

IndiaCan operates 78 franchise centres and 25 company-owned centres across the 22 states of India. Within this year, IndiaCan has plans to partner with 50 franchisees. The target location on their expansion radar would be Southern and Western India. On tapping the under-penetrated market, Sharad of IndiaCan, said: “The focus of the IndiaCan operation would be across all major metro locations as well as on tier-II and III cities, where brand proliferation is limited and quality norms are highly inadequate.”

Frameboxx has till date expanded its reach to 30 cities of India with 52 franchise and 3 company-owned centres. Naveen of Frameboxx Animation & Visual Effects, is keen on expanding their brand's reach in the southern and eastern regions of India. On their plans he said: “This year, we have plans to add 8-10 outlets, the major cities of the east that we would want to add to our network are Ranchi, Jamshedpur, Kolkata, Dhanbad, Guwahati, and in the south we are looking at tapping cities like Mangalore, Mysore, Kalicut, Trivandrum and Madurai.”

For running a vocational training institute under any category, the capital investment varies from location to location. In case of AISECT, the franchise investment ranges between Rs 3 lakh and Rs 10 lakh, while area requirements may also differ.

In the case of IndiaCan, the franchise would need to invest between Rs 15 lakh and Rs 20 lakh. For running a Frameboxx franchise, the carpet area of 1,500-2,000 sq.ft is entailed, and investment starts from Rs 25 lakh to Rs 30 lakh.

Invest in franchise support

To evade brand dilution at the franchisee's end, franchisors provide a complete package of training and support to franchisees so as to run the franchised premises as per the guidelines mentioned in the franchise agreement. For AISECT, training is a continual process. Once a franchisee comes into the AISECT system, he is continually exposed to several workshops and training modules. The key areas covered are centre management, finance management, advertising and marketing techniques, counseling methodology, faculty management and many others. Faculty training is more subject-oriented and various groups are formed who are trained by master trainers.

Challenges and strategies

The road to success is not always smooth. Sometimes franchisor-franchisee relationship takes a hit when the business fails to run according to standard operating guidelines. Other major challenges relate to finding the right location. While setting up an education business, getting the right location with minimum realty prices matters a lot, as the success of the venture depends mainly on customer footfalls that a centre attracts. To avoid pitfalls in the education space, franchisors are advised to select the right people on board who can take their brand to new heights.

On how he overcame challenges, Santosh of AISECT Ltd, said: “Marketing across such a widespread and deeply penetrated network was a challenge initially. Whatever surplus we generated financially was always ploughed into other critical areas like content and manpower. As we grew, we consciously apportioned budgets for marketing our brand both to the franchisee and the student community. And this is how we have been able to address this challenge.”

About the prospects of vocational education and training industry, Sharad of IndiaCan, says: “The Indian industry is expected to grow at the rate of 7-8 per cent over the next decade. Most of this growth is led by the service industry, which is primarily driven by trainer manpower. Large population and increasing demand for trainer professionals will be key drivers. There is a need to train 500 million people by 2020. Hence, there is enough scope for this industry to grow. In fact, it's critical for the growth of the Indian economy.”

Experts believe that the vocational education industry will undergo a sea change in the years to come. The industry is currently facing many challenges such as low aspirational value of vocational courses among parents and students, absence of trustworthy brands, inability to reach the virgin markets existing in small tiers, and inefficiency in providing quality education to satisfy the end-consumers. To chart out the robust expansion plans, the industry leaders are striving to consolidate their synergies to work for providing quality education and generating rich dividends. As investments pour into this industry, it will become more organised. This will allow it to become a part of the mainstream education by developing newer technologies for imparting education on a par with conventional education system.

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